GVK Power & Infrastructure on Saturday said it will acquire coal assets and related logistics in Australia from Hancock Group for $1.26 billion (nearly Rs 6,000 crore).
The coal assets have resources to the tune of 7.9 billion tonnes and would help in providing GVK group with fuel supplies for its proposed power projects in India.
The Hyderabad-headquartered company would acquire 79 per cent stake in Alpha Coal as well as Alpha West Coal projects located in Queensland, Australia, while the 21 per cent would be retained by Hancock Prospecting Pty Ltd.
Besides, it would buy out Kevin's Corner Coal project and proposed rail and port projects, related to these coal assets.
"The cost of acquisition is around $1.26 billion, payable in a phased manner to the Hancock Group with $500 million payable at closing," GVK Power & Infrastructure said in a regulatory filing.
Out of the remaining amount, $200 million would be paid one year from the deal closing day. Another $560 million would be paid on "financial close for the project (anticipated to be in 2012) but in any event, no later than three years from closing," it said.
The proposed acquisition would be funded through loans from banks.
GVK Power & Infrastructure would make the investments through GVK Coal Developers (Singapore) Pte Ltd, a step-down subsidiary of GVK Natural Resources. All are GVK group companies.
As part of the deal, Hancock Group chairman Georgina Hope Rinehart has been invited to join the GVK Power's board as a non-executive director.
According to the filing, GVK Power would initially have a 10 per cent stake in GVK Coal Developers, with an option to increase the shareholding to 49 per cent.
GVK Power pointed out that proposed acquisition offers options to enter into "long term coal purchases contracts up to 20 million tonnes per annum for securing long term fuel supplies for its subsidiary GVK Energy Ltd".
The filing further said that the company would pledge shares of GVK Energy and GVK Transportation to secure the equity requirements of the projects, including debt-service requirements.
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